Colorado Judge Halts Kroger-Albertsons Grocery ‘Megamerger’

A Colorado judge has issued an order temporarily blocking the proposed $24.6 billion merger between the nation’s two largest supermarket chains ahead of an antitrust trial in state court set to begin in September.

Colorado Attorney General Phil Weiser in February sued to block the merger between grocery giant Kroger, which operates King Soopers and City Market stores in Colorado, and Albertsons, which operates the Safeway brand. Weiser’s suit alleges that the deal violates state antitrust laws and would have “harmful impacts on consumers, workers, and suppliers.”

The U.S. Federal Trade Commission and a bipartisan coalition of state attorneys general, including Arizona AG Kris Mayes, have also challenged the merger in court.

Denver District Court Judge Andrew Luxen on Thursday granted Weiser’s request for a preliminary injunction against the merger, barring the two companies from completing their deal before a ruling is issued in the case. Luxen noted the evidence suggests the state has a reasonable probability of proving its claims at trial.

Hearings for the preliminary injunction were initially set for August 12. Instead, the companies agreed to a temporary injunction to save judicial and party resources, allowing the case to proceed to trial in the fall.

“I am pleased that Kroger and Albertsons agreed to halt their plans to merge until the court rules on the state’s lawsuit to permanently block the grocery merger,” Weiser said in a statement. He highlighted this delay as beneficial for consumers, workers, and suppliers, especially during peak seasons like school reopening and harvest.

Kroger, headquartered in Ohio, operates more than 2,700 stores. Albertsons, based in Idaho, runs over 2,200 stores across the U.S. The proposed merger is one of the largest retail deals ever, raising concerns from labor unions and consumer advocates about potential price hikes and reduced wages for workers.

Last month, the companies proposed to sell 579 locations nationwide, including 91 Safeway stores in Colorado, to New Hampshire-based C&S Wholesale Grocers to address antitrust issues. Critics argue that C&S, operating merely 23 retail locations, lacks the capability to effectively manage the new stores and compete against a merged Kroger-Albertsons entity.

“We cannot entrust our grocery stores — which are integral to our communities and our workers — to the untested, inexperienced C&S Wholesale Grocers,” said United Food and Commercial Workers Local 7 President Kim Cordova. Her union represents over 23,000 King Soopers and Safeway workers in Colorado and Wyoming.

Weiser’s investigation also uncovered evidence of alleged collusion between Kroger and Albertsons during a January 2022 strike by UCFW Local 7 workers at Colorado King Soopers stores. Allegations include “no-poach” and “non-solicitation” agreements preventing Albertsons from hiring striking King Soopers employees or attracting their pharmacy customers.

A two-week trial in the Colorado case is scheduled to begin on September 30. “My office looks forward to making the case that this merger will eliminate competition and impact food prices, jobs, and consumer choice,” Weiser stated.